HSBC shares climb on sale reports

Banking giant HSBC saw billions more added to its stock market value today as shares rose on reports that it was weighing up a sale of its British retail bank.

The Sunday Times said the group was considering a £20 billion spin-off of the business – which was known as Midland bank before it was swallowed up by HSBC in 1992.

It comes after chairman Douglas Flint revealed to shareholders on Friday that the wider group would consider moving its headquarters out of the UK, explaining that it was responding to “regulatory and structural reforms”.

Mr Flint told the bank’s annual general meeting in London that managers had been asked “to commence work to look at where the best place is for HSBC to be headquartered in this new environment”.

He added that it was a “complex” question and it was “too soon to say how long this will take or what the conclusion will be”.

HSBC declined to comment today on reports about the sale of its retail bank. But shares rose by as much as 5%, on top of a 3% increase last Friday.

Today’s rise at its peak added almost £6 billion to the group’s market value, though some of the gains were later pared back.

At their height in the latest session, the shares were trading at nearly 8% more than they were before the start of trading last Friday, making the bank worth £9 billion more than before the announcement on the review of the headquarters’ location.

It is understood that the review will have no impact on plans announced last month to relocate the head office of the retail bank to Birmingham by 2019, which will see 1,000 jobs transferred from London.

Will Hedden, dealer at London Capital Group, said: “The separation of retail and investment banking and the UK Government’s requirement for the two to be separate companies makes a logical case for a spin off.”

But analysts at Credit Suisse said: “Spinning off UK retail would give up a significant source of earnings – we estimate RBWM (retail banking and wealth management) as the most profitable UK business.”

HSBC is already carrying out an internal separation or “ringfencing” of the retail bank – serving ordinary personal and business customers – from its investment bank under new regulations, as cited in Mr Flint’s statement last week.

In the UK it also faces a banking sector levy which last year cost it 1.1 billion US dollars (£730 million).

The Institute of Directors said following last week’s announcement that it may move headquarters that the “regulatory pendulum has swung too far” against the banks.

HSBC has also been under intense pressure recently over its Swiss private banking arm over claims that it helped thousands of account holders hide billions of their assets from tax authorities.